Winning Strokes

The Indian bourses have Surprisingly changed colour from a green to red once again, though there are as such not much negativite news Except that relentless FII selling.

The BSE Sensex is now trading at 53,165.64 down 126.82 points (-0.13%), while the Nifty is seen at 15,817.10 down 37.15 points (-0.12%). 

The BSE Sensex has come down from 600 - plus points up to the current, 100 - plus down, after the European markets showed red tickers in the opening trade.

However, there is not much negativite news as far as the India's stock markets are concerned. I feel the markets should bounce back, in laste afternoon trade.

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By the way, Google searches for the term *bear market* recently reached their second-highest level since the Covid outbreak. This indicates that market participants are concerned about the current state of the global stock markets.

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Meanwhile, according to a 2 July Wconomic Times report: When we look at the historical Nifty50 PE trend, we can see that whenever this ratio fell below 20x, the 1-year forward returns were also higher. 

When PE fell to 15x in January 2003, for example, benchmark delivered an average 51.80% return over the next year.

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History Repeats Itself in a Spiral

The PE was at an extremely low level during the 2008-09 crash, while the 1-year forward return was over 80%. 

During the 2020 Covid crash, the Nifty PE fell below 20x. A year later, the Nifty returned around 70%.

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The PE traded at an extremely low level during the 2008-09 crash, while the 1-year forward return was over 80%. During the 2020 Covid crash, the Nifty PE fell below 20x. A year later, the Nifty returned around 70%.

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According to history, whenever the PE fell below 15x, the benchmark delivered an average 51.80% return over the next year.

The average return when the PE is between 15 and 20x is 15.20%.

Conclusion: The PE of the Nifty has come down from 40.80x in February 2021 to current around 19.57x, which is an encouraging sign.

Moreover, FIIS have done with 80-85% selling. 

This suggests information suggests that from a medium to long-term perspective, this could be a profitable level for market participants to begin nibbling on good quality stocks.

Moreover, the US Treasury Secretary Janet Yellen, said in June that the tariffs on Chinese imports have hurt American consumers and businesses and are contributing to the fastest inflation in 40 years.

Probably to address such a concern, the Joe Biden’s administration is weighing options, about former President Donald Trump’s tariffs on hundreds of billions of dollars worth of imports from China, which is both its biggest trading partner and competitor.

The media reports suggests that the *US President Joe Biden might announce his decision to roll back some tariffs on Chinese imports as soon as this week. Dow Jones reports, the move might lessen domestic inflation and could also reduce pressure on Beijing.

#Adani Power Ltd (Rs.263.50) recently completed acquisition of 100% equity shares of Support Properties Private Limited ("SPPL") and Eternus Real Estate Private Limited ("EREPL") from their respective shareholders at Rs.609.40 crores. 

By acquiring the two companies, Adani Power plans to set up infrastructure facilities.

#I just now spoke with the sources in Wockhardt Ltd (Rs.206.05). The news is encouraging, except one point due to Russia - Ukraine war. I'll write about this on my blog. Please Stay Tuned! Photo: Express Pharma.